The art of the implausible

A week after vice chancellors intervened in the General Election campaign with an attack on Labour's tentative proposal to lower tuition fees - citing its 'implausibility' - Martin McQuillan argues that the intervention was a mistake that may now backfire.

Former Deputy Vice-Chancellor (Research and Innovation), Kingston University

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On Monday 2nd February the vice chancellors of English universities on the Universities UK board published a letter in The Times newspaper criticising the potential Labour Party policy of reducing the tuition fees cap from £9,000 to £6,000.

The letter described the policy as ‘implausible’, suggesting that to fund the difference of £3,000 per student would require setting aside £10bn over the course of the next parliament. This is unlikely, the vice chancellors said, when all parties are committed to public spending cuts, and would result in limiting the numbers of students attending university, damaging economic growth, while only benefiting higher-earning graduates.

The letter ends by proposing more generous support for maintenance as an alternative way to help students, and suggesting that any evolution in the funding system should be sustainable for government and for universities, while incentivising access to higher education. The letter was accompanied by a front-page story that was picked up across other media outlets as ‘top academics attack Labour plan for universities’.

I understand that the letter emerged over the weekend after UUK representatives had met with shadow spokesperson for universities, Liam Byrne, at the House of Commons on the Friday morning. Frustrated by Labour’s refusal to provide greater clarity on possible £6,000 fees, the letter was intended to discredit the policy before it got out the blocks.

For UUK, this was a remarkable thing to do. A letter to The Times is one of the strongest weapons in the arsenal of concerned vice chancellors. UUK has had a history of quietism in this parliament, seemingly keen to placate government over controversial and often ad hoc reforms even if there have been individual dissenting voices behind closed doors.

Chief Executive Nicola Dandridge said in March 2014 that UUK did not want fees and university funding to become an election issue, preferring cross-party consensus and any review to occur after the election. It was perhaps naive to imagine that once the messy business of democracy and public scrutiny had passed, the vice chancellors would be able to return to influencing in the clubs and corridors of power.

The implausible letter to The Times then looks like a deliberate attempt to sabotage the fees policy and by association damage Labour Party prospects in the long run up to a May election. The signatories might deny the latter charge but this was the clear effect of the letter as Labour were unable or unwilling to unveil the policy in response, leaving the airwaves to be filled with criticism of the party and giving the appearance of not having fully worked out a fundamental policy.

Given that tuition fees represent a huge political opportunity for Labour, this attack by the vice chancellors risked turning an open goal into a damaging failure.

The fall out from this letter will be considerable. If the UUK board thought that this would either ‘out’ or kill the policy, then they are wrong. In fact they are the ones who have now made £6,000 fees an election issue. This was not a policy that is well known outside of the circles of HE rainmakers but has now crossed over into the mainstream as a result of the UUK letter.

Accordingly, all the letter has achieved is to ensure that £6,000 fees will now almost certainly be Labour Party policy going into the election. The policy, such as it is, first came out of Ed Miliband’s office and is currently under consideration by Labour’s Treasury team. In the run up to the general election, and in the seeming absence of an alternative, Ed Miliband and Ed Balls cannot be seen to back down in the face of ‘vested interests’ in the form of vice chancellors.

If Ed Miliband is incautious in his public attacks on Rupert Murdoch, the energy companies, and the CEO of a well-loved business like Boots, he will lose little sleep over taking on the board of UUK. As a result of the letter, it is also more likely that any Labour fees policy will now be unveiled only in the short run up to the election, on the publication of the manifesto. The party cannot be seen to be reactive to criticism from VCs and needs to put distance between this latest row and the actual policy launch. So the outcome of the letter to The Times is to ensure that the policy will be subject to less scrutiny rather than more.

To audiences outside of higher education management, afflicted by years of austerity, the UUK action may be seen as a remarkably misjudged intervention, guaranteed to achieve the opposite of what it intended. It has also set up a contest between a possible incoming government (a Labour minority is still the most likely outcome of the election) and the university sector. Having set out to avoid making university funding an election issue, how has it come to this for the vice chancellors? The answer is simple: politics.

How universities are funded is not a fiscal issue, it is fundamentally a political one. Esoteric arguments over the sustainability of the RAB charge and income contingent repayment thresholds might get the readers of Wonkhe out of bed in the morning, but they do not translate into the wider public arena.

A reduction in the headline figure of tuition fees does, especially when Labour election strategy is so heavily dependent upon winning back voters who defected to the Liberal Democrats in 2010. Tuition fees are a synonym for the supposed betrayals of Nick Clegg and his party in government. A generous offer on fees would position Labour on the side of a key demographic of young voters.

It also has the simultaneous benefit of reminding the rest of the electorate of Lib Dem broken promises and painting the Conservatives as uncaring and out of touch. If this policy helps swing key marginals and puts Ed Miliband in 10 Downing Street, £2bn a year will be a price well worth paying. Otto von Bismarck called politics ‘the art of the impossible’ meaning the way in which skilled politicians can turn the seemingly unattainable into the inevitable. The board of UUK has much to learn about the art of the implausible.

They have justifiable concerns over a reduction in the tuition fees cap. They are worried that in changing the accountancy convention that would reclassify the difference of £3,000 from borrowing to direct taxation, this would make higher education funding more vulnerable during any future round of public spending cuts.

If BIS has to find savings in the next Comprehensive Spending Review either this part of the teaching budget or the science/research budget would come under pressure, with one of them likely to take a hit. It is also highly possible that bringing part of the teaching budget back into directly allocated public expenditure would mean that a future Labour government would not be able to make good on George Osborne’s promise to remove student number controls. However, the Chancellor also knows that he would struggle to be able to fund this and a postgraduate loan book, hence the full implementation of both policies have been postponed until after the CSR with sticking plaster solutions for the coming academic year.

In response to the vice chancellors one could defend the £6,000 fees policy on several grounds. Firstly, it does not take any money out of universities but does rebalance the responsibility for funding them between graduates and government, ending the unfortunate impression that a degree is only a personal benefit to boost the earnings of individuals.

Secondly, it reintroduces into HE policy a degree of control for government who would be able to set priorities and incentivise universities’ behaviour over the £3,000 allocation. Vice chancellors are particularly unhappy about such a prospect.

Thirdly, it may set a key aspect of public borrowing on a more sustainable footing, giving better value to taxpayers. However, without seeing the detail of the policy and how it is to be funded this is difficult to confirm. For example, would it involve the sale of the student loan book to balance the ledgers in the short term, to whom, and at what price?

Fourthly, it reduces the future risk to the economy presented by excessive graduate debt. It may benefit high-earning graduates but it is disingenuous to say that a reduction in overall levels of debt does not benefit everyone, especially public sector workers whose salaries increase incrementally over the lifetime of their loans.

However, the future of higher education policy lies not in speculation about the prospects for graduate earnings and repayment rates, but in the political landscape of the next few years. It is currently impossible to call the outcome of the May election and all parties are now making contingency plans for a second general election within the year. We cannot rule out the possibility of a Labour-SNP coalition or a Conservative-UKIP government. Such things looked highly unlikely a year ago, but that’s the art of the implausible for you.

What might happen to the funding of English universities in either scenario is a question with such fluid outcomes that it makes UUK’s breakfast tiff with Liam Byrne look like very small potatoes indeed. In contrast, the Russell Group, who usually vie with UUK to be the voice of the sector on such issues, have been noticeably silent on this topic, preferring instead to do their lobbying direct to the Treasury officials running the ministry in George Osborne’s electoral duties absence.

Perhaps, they have realised that in the coming months it looks pretty implausible to ask publically for their preferred option of lifting the fees cap. While another cross-party review of the long term sustainability of HE funding seems a long way off because it would require the context of stable government.

None of this is to preclude criticism of Labour policy on fees. To have been presented with such a golden opportunity and to have put off the decision so long as to risk snatching defeat from the jaws of easy victory, demonstrates its own political flat footedness.

As recently as last week Chuka Umunna (spokesperson on Business, Innovation and Skills) said that ‘a graduate tax’ remains the preferred future option for Labour. It is not clear that anyone in Labour knows what a graduate tax would look like, the phrase is just a useful shibboleth that changes the terms of the debate from the toxicity of fees and loans to some vaguely plausible future alternative.

Those vice chancellors who embraced the £9,000 fees cap in 2010 did so not necessarily out of ideological conviction but out of the desire to maximise funding in their own institutions. The result has been potentially poor value for money for the taxpayer, an amenities race between universities, a collapse in the UK postgraduate market, little action on addressing inequality or social mobility, and considerable resentment in government and opposition about university funding.

The friction between UUK and Labour over fees might suggest to the politically savvy that the interests of universities depend upon more than just money flowing through the door.

Implausible as it might seem to vice chancellors, the goodwill of the public that funds higher education is a more important political consideration than the end of year surplus. It is also implausible that Prime Minister Miliband would forgive or forget the events of last week: the temptation now must be to ‘weaponise’ tuition fees as an election issue. Dabbling in politics can be a risky business and the UUK board should think twice before firing off their next letter in haste.